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Continental (CLR) Q2 Earnings & Revenues Beat Estimates

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Continental Resources, Inc. (CLR - Free Report) reported second-quarter 2022 adjusted earnings of $3.47 per share, beating the Zacks Consensus Estimate of $3.17. The bottom line significantly improved from the year-ago quarter’s 91 cents per share.

Total quarterly revenues of $2,650 million beat the Zacks Consensus Estimate of $2,646 million. The top line improved from the year-ago quarter’s $1,235 million.

The strong quarterly earnings can be attributed to higher oil-equivalent production volumes and commodity price realizations.

Continental Resources, Inc. Price, Consensus and EPS Surprise

Continental Resources, Inc. Price, Consensus and EPS Surprise

Continental Resources, Inc. price-consensus-eps-surprise-chart | Continental Resources, Inc. Quote

Oil Production

Production averaged 400,168 barrels of oil equivalent per day (Boe/d) in the reported quarter (49.6% oil) versus 338,699 Boe/d in the year-ago period. Production volumes increased primarily due to higher output from the Powder River basin.

Oil production in the reported quarter was 198,313 barrels per day (Bbls/d), up from 166,765 Bbls/d a year ago. Natural gas production increased from 1,031,603 thousand cubic feet per day (Mcf/d) in second-quarter 2021 to 1,211,125 Mcf/d.

Crude-Equivalent Price Realization

In second-quarter 2022, the crude oil-equivalent net sales price, excluding the effect of derivatives, increased to $76.02 per barrel from $39.99 in the prior-year period. Natural gas was sold at $7.75 per Mcf, up from $3.06 in the year-ago quarter. The average realized price for oil was $106.41 a barrel, up from $62.37 in the prior-year quarter.

Total Expenses

In the second quarter, total operating expenses of $974 million increased from $790 million in the June quarter of 2021. Total production costs increased to $153.2 million from $96.5 million. Exploration expenses in the reported quarter were $4.6 million compared with $2.3 million in the year-ago period. Also, transportation, gathering, processing and compression costs increased to $76.4 million from $52.4 million.

Financials

In second-quarter 2022, the total capital expenditure was $650.2 million. It generated a free cash flow of $1,230.3 million in the reported quarter.

As of Jun 30, 2022, the company had total cash and cash equivalents of $553.3 million. It had long-term debt of $5,662.6 million (excluding current maturities).

Outlook

For 2022, Continental reiterated its average oil production guidance at 200,000-210,000 Bbls/d. Natural gas production is expected to be 1,100,000-1,200,000 Mcf/d.

Continental continues to expect its capital spending budget for this year at $2.6-$2.7 billion.

Zacks Rank & Stocks to Consider

Continental currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the energy space include EOG Resources (EOG - Free Report) , BP plc (BP - Free Report) and Matador Resources (MTDR - Free Report) . While EOG Resources and Matador carry a Zacks Rank #2 (Buy), BP sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

EOG Resources, a leading oil and natural gas exploration and production company, is well placed to capitalize on the crude rally.

EOG Resources is strongly committed to returning capital to shareholders. Since its transition to premium drilling, the company has returned more than $10 billion in cash to stockholders. With the employment of premium drilling, EOG Resources will be able to reduce its cash operating costs per barrel of oil equivalent, thereby aiding its bottom line.

High oil prices are aiding BP’s upstream operations. BP's sizable refining and marketing operations will protect it if the crude pricing scenario turns unfavorable again.  In 2022, it is likely to witness earnings growth of 106.5%. Over the past few quarters, BP has successfully been reducing long-term debt.

High oil price is also aiding Matador. MTDR is highly efficient in its operations as reflected that it is increasing production significantly despite lowering its costs. Matador has a strong focus on reducing debt and returning capital to shareholders.